EUR/USD turned positive on Friday after U.S. data helped it erase earlier losses that had taken it down to a low of 0.99258, and a bullish phase appears to be developing as it consolidates recent gains.
rates EDH3 softened slightly after September core PCE year-on-year came in below estimates while month-on-month matched estimates as it dropped to 0.5% from 0.6% in August.
Q3 employment costs fell to 1.2% from Q2's 1.3% while wages fell to 1.3% from 1.4%.
The data nL1N31S2TD could indicate price pressures are moderating slightly, which could lead the Fed to take a less hawkish stance going forward.
While the Fed will probably hike by 75 bps at its meeting next week the probability of only a 50 bps move is growing.
The CME Group's Fed Watch Tool Click here indicates a higher probability of a 50 bps hike from just one week ago.
EUR/USD is likely to consolidate in the 0.9950-1.0100 until the Fed meeting.
If the U.S. central bank hints at less hawkish policy, U.S. rates and the dollar should fall and EUR/USD's rally should resume.
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